Manufacturing growth slows in August as economic concerns loom: ISM
Economic activity in the U.S. manufacturing sector expanded in August for the eighth consecutive month to 54.6%, but that was 1 percentage point lower than July, according to the Institute for Supply Management’s latest Purchasing Managers’ Index.
The overall economy grew for the 22nd month in a row, ISM reported. A figure below 50% indicates an industry in contraction.
The S&P Global U.S. Manufacturing PMI registered 53.9%, unchanged from July.
“Although we’re in the eighth month of an expansion trend, the Iran war and tariffs threats continue to be the biggest concern to the manufacturing economy,” Susan Spence, chair of ISM’s Manufacturing Business Survey Committee, said during a media call on Monday.
In August, 42% of the comments were positive and 58% were negative, with a 1-to-1.4 ratio of positive to negative sentiment, Spence said in a news release. Pricing volatility was mentioned in 57% of negative comments, increasing lead times in 46%, the Iran war in 30% and tariffs in 29%.
Five of the six largest manufacturing industries — transportation equipment, petroleum and coal products, machinery, computer and electronic products, and food, beverage and tobacco products — expanded in August.
The New Orders Index expanded for the eighth consecutive month registering 53.7%, down 3 percentage points compared to July’s figure of 56.7%. The August reading of the Production Index at 58.3% was 0.2 percentage point lower than July’s reading of 58.5%.
The Prices Index remained in expansion, or “increasing” territory, registering 71.1%, the same reading as July. The Backlog of Orders Index registered 51.8%, down 3.2 percentage points compared to 55% in July.
The Employment Index reading of 51.2% was down 1.6 percentage points from July’s figure of 52.8%. The manufacturing industryadded 5,000 jobs in July.
The Supplier Deliveries Index indicated slowing performance for the ninth month in a row after one month in “faster” territory. The reading of 59.3% was up 0.4 percentage point from its July reading of 58.9%. Supplier Deliveries is the only ISM PMI Report index in which a reading of above 50% indicates slower deliveries.
The Inventories Index registered 50.6%, down 0.6 percentage point compared to July’s reading of 51.2%. The Customers’ Inventories Index reading of 42.8% was 2.1 percentage points higher compared to the 40.7% recorded in July.
